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Three core investment trust picks for a NISA portfolio

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02/07/2014
Following the introduction of the NISA on 1st July, Morningstar's closed-end fund analyst Szymon Idzikowski considers three highly rated investment trusts available to UK investors.
Three core investment trust picks for a NISA portfolio

1. Witan Investment Trust – 

One way to start building your NISA portfolio is by finding a good global fund manager to ensure diversification across sectors, stocks and regions. One global equity fund that we rate highly is Witan Investment Trust. The fund is run by Andrew Bell and Andrew Lindsay of Witan Investment Services. What makes this particular fund quite unique is that it is a multi-manager fund. Andrew Bell and Andrew Lindsay are responsible for asset allocation and manager selection, with oversight from the board and from an external consulting company, Towers Watson. The team use external fund managers to run individual sleeves. For example, names such as Artemis and Lindsell Train run the UK sleeve, Matthews runs the Asian sleeve and MFS run the global sleeve.

2. Scottish Mortgage 

We also have a high opinion of Scottish Mortgage. This is different from Witan Investment Trust in that it is much more concentrated, with only 60 to 80 names in the portfolio, and the top 10 holdings accounting for more than half of the fund’s size. A lot of the names in the portfolio are well known technology companies – for example Google, Facebook and LinkedIn. Another benefit of this fund is that it is run by two very experienced fund managers, who operate a tried and tested process that has delivered over time. The fund is cheap, though it must be noted that as with any high conviction portfolio, there is a possibility of higher volatility. In the case of this fund, technology firms are a prominent part of the portfolio, and returns will therefore be, to some extent, correlated with the sector’s performance.

3. F&C Global Smaller Companies 

Another trust with merit is F&C Global Smaller Companies, a fund that is run on the ethos that smaller companies will outperform larger companies over the long term. The trust operates a blended approach compared to the previous two examples. Peter Ewins is responsible for both asset allocation and stock selection in the UK. Outside of the UK, he employs Sam Cosh to select European stocks. Nish Patel picks stocks in the U.S., and for other regions, the trust employs external fund managers. We believe this is a good use of resources.

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